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December 3, 2009    

American Airlines & TPG offer lifeline to Japan Airlines

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by Kay Murchie

Struggling Japan Airlines (JAL) has been offered another financial lifeline, this time from American Airlines and private equity firm TPG.

The airline, which is Asia’s largest carrier, has been struggling amid the global economic downturn which has led to a slump in demand.

Many airlines have been forced out of business as fewer people are travelling by air.

However, JAL has also been affected by the outbreak of swine flu and the airline recently posted a net loss of 32.3 billion yen for the July to September period, compared with a 40.1 billion yen profit a year ago.

American Airlines and TPG have offered $1.1 billion (£659 million) of investment to JAL and comes a matter of weeks after the airline was offered a $1 billion lifeline from Delta Air Lines and its Sky Team alliance partners.

American and Delta are both keen to hook up with JAL with a view to acquiring its profitable Asian landing slots.

Aviation consultant Mark Kiefer said: “There’s a lot at stake here, especially given the importance of the Japanese market and the Asian market to all of these carriers.”

The airline is seeking an injection of public funds to strengthen its capital as it restructures under the watchful eye of a state-backed turnaround body.

JAL recently unveiled plans to eliminate thousands of jobs in a bid to save money as it struggles with $15 billion of debts and a big pension deficit.

Since 2001, JAL has been bailed it out four times by the Government and its shares recently hit a record low after it emerged that Mitsui & Co broking house had sold all its shares in the carrier.

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Tags: American Airlines, Delta, , financial lifeline, , , landing slots, , , , swine flu, TPG